A View from the CFO's Office. . .

I recently attended MIT Sloan's annual CFO Summit in Newton, Massachusetts; not just to earn the CPE credits needed to maintain my CPA certification, but more importantly, I wanted to gain an understanding of CFOs' perspectives in this difficult economic environment. This is something that every CMO should understand to help optimize their management strategy as well as their tenure.

It was no surprise that the theme of the conference was "Relentless Volatility". Jack McCullough, one of the two co-chairs of the event, put it well in his opening remarks: "My investment banker friend in London described this environment as being similar to a divorce but worse. . . 'I've lost half of my net worth, but I'm still stuck with my husband.'" I'd like to summarize several key comments from the event that may offer you some ideas for how best to not only ride out the storm in the upcoming year, but even perhaps to leverage the situation to improve your position and take share in this tough market:

• As part of your annual and intra-year planning process, ensure that you leverage scenario planning to best identify what challenges you may encounter in the next quarter or year, as well as what steps you need to take to minimize the potential damage from these risks;
• Communication in this volatile environment increases in importance. . . not just with your functional team, but also with senior management; (i.e., don't be intimidated to better engage your CEO and CFO, especially when you need help or need their advice)
• Ensure that your executive team knows that you not only understand the current challenges you face, but that you also have a plan to address them; (and meeting with the CFO offers a great chance to ensure that your plans are grounded in reality, as well as a chance to share your vision and increase their comfort level with your management framework and strategy)
• "We've spent a significant amount of time reallocating our budgets to ensure that we're focusing on investment in the high growth, high profitability areas vs. in the "harvest" areas that may not need as much investment", Norman Robertson, CFO Progress Software; (e.g., IDC CMO Advisory Practice research indicates that the average technology vendor allocates 38% of their marketing budget to newer, higher growth business areas or product lines vs. existing, more mature business areas or product lines)
• The large companies will no doubt be reducing their on-campus recruiting efforts this year. Therefore, now is a great opportunity to hire the best and brightest individuals from the top schools.
• And finally, continue to drive innovation within your team, motivating individuals to take chances in an effort to change how they do business today. We need to give our staff the opportunity to be leaders, stepping into the light that no one else may see.

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Marketing's Planning Process: An Ongoing Activity, not an Annual "Trip to the Dentist"

As your marketing organization approaches the end of its annual planning cycle, remember that it shouldn't end on January 1, 2009. As marketers we must get better at managing our annual and intra-year process as a part of our regular business processes vs. a once per year disruptive event. Doing so could be a helpful step forward in improving our ability to manage investment, shift resources in response to market conditions, and improve alignment within marketing and with the rest of the organization. Based upon interviews with marketing leaders in the technology industry and findings from IDC's recent Marketing Operations Board meeting, I'd like to offer the following "food for thought":

1. Staffing: Do you have an individual or team who's accountable for developing, executing and governing your planning process? The marketing operations function can provide the foundation and discipline for a well-orchestrated and managed planning process. Although this role has been effective in planning and orchestrating marketing's annual and intra-year planning process, marketers' view of planning as a separate activity from their daily job coupled with their lack of financial acumen continues to hinder the success of planning. (email me to receive a copy of our recent mktg. ops. study. . mgerard@idc.com)

2. Process: Marketers have made significant progress in establishing planning processes, such as global marketing leadership boards, a consistent taxonomy, financial tracking and other performance measurement processes; however, the lack of consistent adoption of these processes across the organization including a lack of alignment with finance, sales and regional marketing must be overcome to advance marketing to a higher level of operation and performance.

3. Technology: It is only in the past 3-4 years that most marketing organizations have actually achieved an understanding of how much they spend on marketing across the organization, mostly leveraging highly manual processes and Microsoft Excel. A recent IDC study revealed that 40% of IT marketers in companies >$3B in revenue continue to use Excel and other manual processes vs. a more automated MRM(marketing resource management)-type solution. It is time for us to advance to the next level of marketing, including tracking of investment at a more detailed level. (e.g., by objective, campaign, activity, brand, product, country, or segment) MRM applications offer the opportunity to do this in a more systematized and efficient manner. But remember, process first.

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2009 Guidance for CMOs. . .

When budgets are on the cutting board, the marketing function often has to shoulder more than its fair share of the pain. The cuts of 2008 and 2009 will be no exception. In IDC's most recent budget survey, closed in September 2008, actual 2008 spend increase will be just 3.5%, a reduction from the 4% predicted earlier this year. In addition to the short term budget cuts, the pressures of the current downturn will usher in a period of more sweeping marketing organization change. In my five years as a CMO Advisory analyst at IDC, I have never observed so much management analysis regarding potential marketing-organization change. Here are some things to think about to help you to survive and thrive in 2009:

• Transformation Starts at the Top. Many tech marketing organizations have far too many silos and lack alignment. For these companies, there is too much independent resource and spending at corporate and, in some cases, in the business units; and not enough spending in the field, closer to the prospects and customers. This also contributes to the dis-connects between the sales and marketing functions – as the sales department often perceives that marketing's actions are far removed from their efforts. IDC suggests further examination of the marketing organization's structure to improve alignment between corporate marketing, business unit marketing and field marketing.
• Seek to Decentralize. Continuously question yourself during the budget planning process: where is the money owned; and where is it spent? IDC guidance is for the typical large tech vendor of greater than $1b in revenue to have at least 45-50% of its total marketing execution "spent" in the geographical regions. Currently, about 36% of the total marketing budget is directly owned and spent by the regions. Add to this the 6% of the typical corporate marketing budget that is "spent" by the field. The total is about 42% of spend in the regions, and so is short of the 50% benchmark goal.
• Improve Relevancy. Two areas of essential guidance to help with the relevancy effort including campaign management and sales enablement. The first is an improved Campaign Management function. This role should seek to knit together disparate product-line marketing efforts into broader and larger themes. I have observed several top CMO's making these moves in 2008. The second area is Sales Enablement. Marketing needs to improve its ability to get the right marketing assets to the right sales-people, at the right time and in the right format. This is hard to do: its needs go above and beyond product marketing's attempts to do this.

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Rise of the Campaign Manager Role

Even the most successful technology firms continue to struggle with consistent and effective execution of their campaigns and related go-to-market strategies, unable to improve their alignment with marketing or the organization as a whole. The campaign management function provides the opportunity to solve the foremost problem of tech marketing today: that of the declining return on marketing investment that results from executing marketing mix elements in separate and disintegrated streams. Tech marketing departments that have not structured for this role yet should do so.

Here is some key guidance and insight based upon my recent interviews with marketing leaders in the technology industry as well as findings from IDC's recent Marketing Operations Board meeting with 33 marketing professionals:

• Campaign managers provide the missing link between the business units, marketing shared services and regional marketing. At Quest Software, campaign management serves as the liaison between marketing shared services groups and the business units and ensures sales' involvement in the campaign management process.
• The foundation of a successful campaign is a detailed go-to-market strategy that includes, but is not limited to, target segment(s), messaging aligned by audience, marketing mix, channel strategy, objectives, and metrics and targets. IBM uses a master brief at the start of any new marketing program, product announcement, or launch to help lock in these elements.
• A campaign's go-to-market strategy and execution requires tight global alignment across marketing and sales, while ensuring that specific parties remain accountable along the process with established timelines. Symantec has developed tiered campaign processes and ensures that regions are leveraged as part of this process to secure their involvement and improve efficiencies of planning and execution.
• Yes, process comes first, but don't underestimate the power of technology. Differentiate with newer campaign management software to establish and leverage one-to-one relationships with your prospects and customers and continue improving lead management processes, particularly lead nurturing activities.
• Common functional and cross-functional metrics continue to apply for campaign performance measurement, yet room remains for new metrics. Don't be afraid to experiment with new metrics. . . and don't underestimate the value of more qualitative metrics.

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Common Attributes of Today's Leading Tech CMOs

Each year IDC completes a rigorous study of technology marketers' efficiency of their marketing organization. This includes over 100 of the leading tech. firms, representing over $400 B in revenue. To help separate the "leaders" from the "laggards", I've developed a Marketing Performance Matrix (2x2 matrix) to stratify marketing leaders and laggards. Each participating company is located on the Matrix as a function of the efficiency of its organizations' operations and the effectiveness of its execution. However, the numbers are only part of the analysis. We also interview the CMOs at several companies within the leadership quadrant.

Here's a bit of what we've learned from these market leaders:

• Gain the trust of your CEO and CFO. Nothing gains the C-level team’s trust of marketing more than demonstrating fiscal management responsibilities and receiving high praise from the sales organization. Nortel’s executive team was extremely impressed with the operational rigor that Lauren Flaherty, Nortel’s CMO, has brought to Nortel’s marketing organization; including her team’s progress in managing marketing investment and aligning with sales for effective execution in target markets. Her progress gained her a sizable increase in marketing budget for 2008.


• Stop doing more with less. Marketers need to stop the cycle of continuing to expand their number of activities with less money and staff and aim for quality and impact from a fewer number of marketing campaigns. Sun Microsystems demonstrated this discipline in 2007. Sun’s marketing leadership team has been driving the marketing organization to develop fewer but more effective GTM campaigns and has reduced the number of worldwide campaigns from 82 in the past (pre-2007) to no more than 6.10 campaigns currently in the market. HP Technology Solutions Group’s (TSG’s) CMO, Deb Nelson, has rallied her troops around three to five integrated marketing campaigns.


• Leverage a strong, senior marketing team in the regions to stay close to the customer and improve your team's agility and reaction to market and competitive shifts. More advanced marketing organizations have established processes and infrastructure across their marketing organization that enable greater decentralization without losing management insight and influence. One example is Avaya: according to Jocelyne Attal, Avaya’s CMO, "corporate marketing needs to act more as a governance function." Citrix’s CMO, Wes Wasson, hired more business-oriented marketing executives to strengthen its regional presence while also putting a global professional development program in place.

Please feel free to contact me at mgerard@idc.com for additional information on this study or add your comments below.

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Stop Doing "More with Less"!

For several years now I've heard the adage that marketers need to "do more with less". That is, during the "Internet boom" technology marketers enjoyed the "excesses of marketing investment", resulting in the luxury of having a sufficient number of people and significant backing for program investment; while today, as a result of significant budget cuts and reorganizations, we feel the need to maintain the same number (or more) of programs and campaigns with fewer people to support them.

Well, I think that we need to stop doing "more with less". That is, aim for quality and impact from a fewer number of marketing campaigns, programs and activities. Sun demonstrated this discipline in 2007. Sun's marketing leadership team has been driving the marketing organization to develop fewer but more effective go-to-market campaigns; reducing the number of worldwide campaigns from over 75 in the past (pre 2007), to no more than six-to-ten campaigns currently in the market. Another example of this strategy is evident at HP TSG, where CMO Deb Nelson has rallied her troops around 3-5 integrated marketing campaigns.

Challenges of stopping the cycle of doing more with less include: shifting marketing's culture to be more strategic versus tactical (not an easy feat with continued pressure from sales for short-term results); achieving marketing's buy-in and alignment with much fewer campaigns, which may result in a lack of support for some products or geographies in the interest of focus, at least in the early stages of this process; putting in place key staff and processes to improve marketing organization's efficiency and effectiveness with this new strategy (e.g., campaign management, marketing operations, sales enablement, a shared service marketing team); and collaborating with sales leads and other CMO peers for development and buy-in to this strategy.

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Have we made any progress in marketing & sales alignment?

Over the past five years that I've been speaking with CMOs as part of my work here at IDC, sales alignment continues as one of the top priorities on every CMO’s to-do list. The increasing maturity of the technology sector accompanied by significant consolidation will only increase the importance of marketing and sales working in unison as part of the customer creation process. In a recent study, we asked marketing and sales folks to rate marketing’s effectiveness at optimizing sales’ worldwide efficiency and effectiveness (1 = not effective, 100 = very effective). Marketing executives rated marketing’s contribution to sales higher than the ratings provided by sales executives: 62 versus 57, respectively. The key message here is not that marketing gave itself a higher grade but that, more importantly, both scores remain low relative to the importance of this alignment to the success of the organization; and with an average of 15% of revenue, or more, being invested in sales and marketing, this alignment remains a process in disrepair.

What are sales and marketing leaders intending to do about this problem?

1. Better alignment of sales and marketing IT infrastructure.
2. Better alignment and integration of (what should be) joint processes (e.g., planning, budgeting, forecasting, market segmentation, go-to-market strategy, lead management)
3. Better alignment/utilization of performance measurement or metrics

Here are some actions sales and marketing executives should take to accomplish these objectives:

1. Integrate marketing and sales operations. This can be a "soft" merge, which would involve alignment of the goals and responsibilities for the marketing operations personnel and the sales operations personnel who report separately and respectively up through the marketing and sales structures. It can also be a "hard" merge, which would have the sales and marketing operations functions incorporated into a single organizational position.
2. Leverage and dedicate field marketing to develop and deploy marketing strategies/assets in collaboration with sales. Dedicated field readiness managers (sales enablement managers) can ensure that globally based enablement "teams" understand sales’ knowledge gaps, while soliciting their strategic input around the overall sales strategy. Field marketing needs to act as the "center of gravity" for development and execution of the local marketing and sales strategy in collaboration with sales.
3. Align sales and marketing with the needs of the customer in mind. In the words of one of our clients. . . "[We have] marketing and sales define and map customer needs, customer acquisition and retention processes along with definitions of key roles, hand-offs, inputs/outputs, and organizational structure required to support such processes."

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